Russia Responds at Europe's Proposal to Loan Frozen Moscow's Assets to Kyiv

Ukraine is running out of cash to keep going its armed forces and economy afloat, after nearly four years of full-scale conflict with Russia.

For Europe, the answer to plugging Ukraine's financial shortfall of €135.7bn for the coming 24 months rests with assets belonging to Russia that are frozen located within Belgian bank Euroclear, and EU leaders seek to finalize the plan at their meeting in Brussels next week.

Authorities in Russia caution the EU plan would be an confiscation, and the Central Bank of Russia stated on Friday it was taking to court Euroclear in a Moscow court even before a conclusive plan is made.

'Only Fair' to Utilize Russia's Assets, Assert European and Ukrainian Officials

All told, Russia has roughly €210bn of its funds immobilized in the EU, and €185bn of that is managed by Euroclear.

Brussels and Kyiv argue that those funds should be used to rebuild what Russia has devastated: The European Commission terms it a "loan for reparations" and has proposed a plan to support Ukraine's economy to the tune of €90bn.

"It is appropriate that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that that capital then becomes ours," states Ukrainian President Volodymyr Zelensky.

Germany's leader Friedrich Merz says the assets will "enable Ukraine to defend itself successfully against any future Russian attacks".

Moscow's lawsuit was foreseen in Brussels. But it is not only Moscow that is dissatisfied.

Authorities in Brussels is anxious it will be burdened by an huge bill if it all fails, and Euroclear chief executive Valérie Urbain warns using the assets could "undermine the global financial architecture".

Euroclear also has an estimated €16-17bn locked in Russia.

Belgian Prime Minister Bart de Wever has set the EU a series of "logical, sensible, and warranted conditions" before he will accept the reparations plan, and he has left open the possibility of legal action if it "presents significant risks" for his country.

What is the EU's Plan?

The EU is racing against time before next Thursday's summit to agree on a compromise that Belgium can support.

Previously the EU has held off touching the frozen capital directly but starting in 2024 has directed the "excess income" from them to Ukraine. In 2024 that totaled €3.7bn. Legally, using the revenue is deemed permissible as Russia is subject to sanctions and the proceeds are not Moscow's sovereign assets.

But foreign defense assistance for Ukraine has slipped dramatically in 2025, and Europe has found it difficult to cover the shortfall caused by the US decision to virtually halt funding Ukraine under President Donald Trump.

There are presently two EU options designed to providing Ukraine with €90bn, to cover a majority of its financial requirements.

• One is to borrow the funds on financial markets, backed by the EU budget as a collateral. This is Belgium's preferred option but it needs a consensus by EU leaders and that would be difficult when Hungary and Slovakia are against funding Ukraine's military.
• This makes the other option lending Ukraine cash from the Moscow's immobilized capital, which were initially held in financial instruments but have now mostly turned into cash. That money is Euroclear property located within the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and says it is convinced it has addressed them.

The plan is for Belgium to be safeguarded with a assurance covering all the €210bn of Russian assets in the EU.

Should Euroclear suffer a loss of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

If Russia took legal action against Belgium itself, any judgment by a Russian court would not be accepted in the EU.

As an important step, EU ambassadors are poised to endorse on Friday to immobilise Russia's central bank assets held in Europe for the foreseeable future.

Heretofore they have had to vote unanimously every six months to renew the freeze, which could have meant a constant risk to Belgium.

The EU ambassadors are planning to use an special provision under Article 122 of the EU Treaties so the assets stay blocked as long as an "direct danger to the financial well-being of the union" continues.

The Reasons Belgium is Still Not Convinced

Belgium is adamant it remains a staunch ally of Ukraine, but perceives regulatory pitfalls in the plan and worries about being shouldering the fallout if things go wrong.

A normally partisan political environment in this case has rallied behind Prime Minister Bart de Wever, who is being pressured from other European officials.

"Belgium has a modest-sized economy. Belgian GDP is about €565bn – consider if it would need to carry a €185bn bill," comments Veerle Colaert, professor of financial law at KU Leuven University.

While the EU might be able to obtain adequate assurances for the loan itself, Belgium worries about an added risk of being exposed to extra fines or liabilities.

Prof Colaert also contends the stipulation for Euroclear to issue credit to the EU would contravene EU banking regulations.

"Banks need to comply with stability regulations and shouldn't concentrate risk. Now the EU is asking Euroclear to do exactly that.

"Why do we have these financial regulations? It's because we want banks to be secure. And if things fail it would become the responsibility of Belgium to bail out Euroclear. That's another reason why it's so important for Belgium to get ironclad protections for Euroclear."

EU Leaders Under Pressure from Every Direction

The situation is urgent, warn seven EU member states including those bordering Russia such as the Baltics, Finland and Poland. They argue the frozen assets plan is "a financially feasible and politically achievable solution".

"This is a crucial test for us," warns leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do next. That's why we have to succeed in a week's time".

While Russia is adamant its money should not be touched, there are additional apprehensions among EU officials that the US may want to employ Russia's immobilized billions differently, as part of its own peace initiative.

Zelensky has stated Ukraine is working with Europe and the US on a rebuilding fund, but he is also aware the US has been holding discussions with Russia about possible partnership.

A preliminary version of the US peace plan referred to $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving